2 Problem 2 (30 Points) You have recently been hired as an economic analyst for a wall town. The town is considering an application for a garbage incinerator. You are tasked to review the results of the analyst you recently replaced and to determine whether the conclusions were correct or not. Provide evidence to support or refute the analyst's conclusions. Ensure that you state any null and alternative hypothesis, provide critical values at the standard levels of significance, and show your work for the calculation of any t-statistics 1. (10 Points) Test the null hypothesis that the coefficients for distance, income, and distance squared are statistically significant. Ensure that you calculate the appropriate t-statistie for each hypothesistent and provide the critical values of the t-statistic at the 10%, 0% and 1% levels of statistical significance. 2. (5 Points) Your classmate argues that the population coefficient for distance is equal to 0.65. Do you fail to reject to reject this argument? If you reject this argument, at what level of statistical significance do you reject the argument? If you fail to reject the argument, what can you conclude about your classmate's argument? 3. (5 Points) Another classmate argues that the population coefficient for distance is less than 1.10. Do you fail to reject to reject this argument? If you reject this argument, at what level of statistical significance do you reject the argument? If you fail to reject the argument, what can you conclude about your classmate's argument? 1 Table 1: Dependent Variable: Housing Price in Thousands of Dollars Variable Model 1 Model 2 Model 3 Distance 0.82 (0.23) Income 0.03 (0.012) 0.52 (0.15) Constant 0.53 0.53 0.52 (0.03) (0.03) N 1996 106 196 RP 0.001 0.0013 0.2235 p